Planet Lean

Make it light, make it fast, make it smart! A desire for greater efficiency and productivity generally results in highly engineered single solutions. But on the whole, efficiency is a mindset: a process of endless, continual rethinking that requires courage and stamina.

What True Lean Enterprises Can Achieve

Why efficiency is the adequate handling of various forms of disruption

Digitalization will bring an era of transformation and disruption. Companies who are truly lean are best prepared. But what does that mean? Please read our Trend Report on efficiency and lean enterprises.

Efficiency requires wholesale retraining of our workforce

Growth has always been fueled by big manufacturing revolutions

“If we look at economic history, periods of major growth have always been fueled by big manufacturing revolutions,” says Olivier Scalabre, Senior Partner & Managing Director at the Boston Consulting Group in Paris. “It’s happened three times, every 50 to 60 years: the steam engine in the middle of the 19th century, the mass-production model at the beginning of the 20th century – and the first wave of automation in the 1970s.” Between those last two growth phases the Japanese car company Toyota had their own revolution. Taiichi Ōno invented the Toyota Production System (TPS), developing the logistical Kanban system and just-in-time production between 1950 and 1982. These developments were shaped by shortcoming: the company would have liked to build its cars using a taylorist process (a production efficiency methodology whereby production is broken down into small component tasks), but as the 1937-founded family business did not have any press lines they had to produce all parts on a single press. So necessity is the mother of invention, and Toyota’s “invention” here was industrial espionage: Ōno traveled to Detroit, visited the Ford Motor Company, and analyzed their production system.

He then adapted it to his own purposes, as mass production system is not perfectly suited to output of numerous variants in small quantities. Ford’s production tasks were so granulated that its employees no longer had to think; the ethos was simply to keep things moving, and fast. Ōno, on the other hand, gave his workers the opportunity to stop the production line if there was any problem, and he urged them to solve the problem on the spot.

Ōno recognized the need to incorporate the human factor into production in order for it to be efficient, and so he brought thinking and action back onto the production line. “The Toyota style is not to create results by working hard. It is a system that says there is no limit to people’s creativity. People don’t go to Toyota to ‘work’; they go there to ‘think’" – this is one of Ōno’s most famous quotations, and remains the basis of Toyota’s efficiency principle to this day.

We need to teach manufacturing at university again

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Olivier Scalabre, Founder of BCGs Innovation Center for Operations

Industry is undergoing a renaissance due to efficiency demands

That said, there is work done at Toyota, and hard work at that, though its many employees aren't just thinking in 8-hour shifts. In terms of new car sales, Toyota was the second-largest automotive manufacturer in the world in 2016: a company cannot achieve that through thinking alone. Nevertheless, continual thinking forms the core of the TPS – with the objective of replacing the good with the better, and a requirement to question the system. Welcome to Planet Lean!

It’s a planet whose soil still needs tilling: “Today in our factories, only 8% of tasks are automated – the less complex, more repetitive tasks. In ten years that figure will be 25%,” says Olivier Scalabre, who founded the Innovation Center for Operations at BCG. By 2025 advanced robots will join workers on the production line, and together they will achieve 20% more productivity, and 20% more output, to attain 20% additional growth. “But here's the thing about growth – it doesn’t come automatically. Mature economies will have to seize it. It will require wholesale retraining of our workforce. In most countries – such as France, my own country – we’ve told our children that manufacturing has no future; that it is something happening far away. We need to reverse that and teach manufacturing again at university.” Et voilà: the desire for efficiency is giving rise to a renaissance in industry.

Toyotas Trias

The “lean production” embodied by Toyota since the 1950s is a return to self-determination, not a program imposed from above. It is a process that does not know a circuit whistle or a work siren.

Only produce just what is needed and only produce it when it is needed. Anything else is “muda” – Japanese for “waste”.

Your goal is: no errors. Zero. Nada. So if an error occurs, rectify it immediately.

Employees, both internal and external, are encouraged to continually improve their products and processes.

We have learned through experience and observation that lean works everywhere.

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Dan Jones, Lean Enterprise Institute, Cambridge / Massachusetts

A survival kit for Planet Lean

On ‘planet automotive’, it has long been the case that efficiency is no longer a question of productivity, but rather of appropriately handling various forms of disruption. And finding the right business model is one way to deal with these challenges effectively. For today’s car makers this means, for example, not measuring future success by the number of cars sold, but based on the number and frequency of users who benefit from its mobility-on-demand solutions. To be honest, this is not particularly convenient but it is vital if you do not want to leave the field clear for others.

If you overlook this shift the Ubers, the Apples, the Microsofts will move in. Those who rule over the platforms connect customers with vendors; they offer a customer-centric user experience, collecting their data en passant; and – thanks to a steep learning curve – they improve products and services as quickly as they are built. They offer innovative new financing models while pushing the human back into the limelight, and not the machine. Sounds like a survival kit for Planet Lean – or a five-point plan to outlive the next industrial revolution.

“Survival of the fittest” becomes “Survival of the leanest”

You might need that strategy when the revolution comes; during a revolution, groups under varying banners will often collide; sometimes they clash. Darwin’s much-quoted notion of "survival of the fittest" will, for businesses in the next industrial revolution, become “survival of the leanest”: copyable, adaptable, learnable across a wide range of industries. “We have learned through experience and observation that lean works everywhere – we have seen it introduced in activities as varied as constructing a new building, diagnosing and treating patients, and running a school,” comments Dan Jones of the Lean Enterprise Institute in Cambridge, Massachusetts. “But these ideas will take a long time to grow and there will be many more setbacks along the way. The unique power of these practices is that they can’t be dismissed as not working – they are alive and working in our continuing reference model: Toyota.” He continues: “If we struggle we can go back, ask why, and unpeel the next layer of the onion.”

Unpeeling an onion, layer by layer, takes time. Toyota and others have been working on it for over 60 years and they will never finish. Efficiency and excellence are no longer an end-to-end program; not a to-do list to check off, or a strategy that follows a simple path. They are a process; practically a philosophy – and they have no end point.

Giesecke & Devrient LOMO, ZAO

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